BackgroundThe Revenue sought clarification/modification of clause (xiii) of paragraph 103 of the High Court’s judgment dated 01.10.2026. That clause stated that a deposit made by a purchasing dealer during investigation, including through Form GST DRC-03, would not by itself dispense with a show cause notice disclosing the foundational facts, and that the character and effect of the deposit would be determined by the Proper Officer on the facts of each case. The Revenue contended that this observation should not be applied to cases where tax, penalty and interest had been voluntarily deposited and no proceedings were initiated to question the liability, since Section 74(6) provides that no notice is required in such circumstances.The Court clarified that clause (xiii) must be read with clause (xii), which requires a reasoned order addressing the noticee’s reply and disputed conditions of Section 16(2), and, where Section 74 is invoked, a specific finding regarding fraud, wilful misstatement or suppression. The observation about the need for a notice concerned cases where the foundational facts had not been disclosed. The Proper Officer must determine, on the facts of each case, whether the deposit was voluntary or involuntary and its effect. The Court expressly held that clause (xiii) does not narrow the scope of Section 74(6), and that voluntary deposits of tax, penalty and interest attract that provision, so no notice is required in such cases. The clarification also does not permit reopening closed transactions where voluntary deposits had not been questioned by the assessee.Final VerdictThe modification application was disposed of with the above clarification. The Court preserved the requirement for a show cause notice where foundational facts have not been disclosed, while confirming that Section 74(6) continues to apply to voluntary deposits of tax, penalty and interest. The character and effect of a deposit remain matters for the Proper Officer to determine on the facts of the individual case.Key observation: “voluntary deposits made of tax, penalty and interest, would attract the applicability of Section 74(6) of the Act, in which case there would be no requirement of issuance of a notice.”

BackgroundThe Respondents became assignees of leasehold rights in GIDC plots (in Pragna’s case, a plot sold in a departmental e-auction and transferred by GIDC in 2019). The department demanded GST from the assignees under RCM, invoking Section 74 and a further penalty under Section 122(2)(b). The Appellate Authorities set aside the demands following the Gujarat High Court in Gujarat Chamber of Commerce and Industry v. UOI (03.01.2025), and the department appealed to the Tribunal.Final VerdictThe Tribunal noted that it was undisputed that the case was squarely covered by Gujarat Chamber of Commerce and Industry, where the High Court held that assignment of GIDC leasehold rights for consideration is a transfer of benefits arising out of immovable property, outside Section 7(1)(a) read with Schedule II/III, and not liable to GST; the Bombay High Court took the same view in Aerocom Cushions (09.01.2026). The department’s SLPs against both judgments were dismissed by the Supreme Court on 22.05.2026 and 21.07.2026. Holding that the jurisdictional High Court’s judgment holds the field and binds the Tribunal, and the department’s intention to seek review does not dilute it in the absence of any stay or recall, the Tribunal held that GST is not leviable on the assignment transactions. The questions of invoking Sections 74 and 122(2)(b) and applicability of RCM did not survive; the department’s appeals were dismissed and the Orders-in-Appeal upheld.

BackgroundA large batch of writ petitions by purchasing dealers from Punjab, Haryana and Chandigarh challenged show cause notices and orders reversing ITC, in many cases accompanied by cancellation of their own registrations, founded mainly on the suppliers’ non-payment of tax or the retrospective cancellation of the suppliers’ registrations. The petitioners challenged the vires of Section 16(2)(c), and in the alternative sought its reading down to cases of fraud or collusion. The Revenue relied on Maruti Enterprise (Guj HC), Section 155 and the availability of alternative remedies.Final VerdictThe Court held that Section 16(2)(c) does not suffer from any constitutional infirmity warranting its invalidation, since actual payment of tax is the very foundation of ITC; noting that the SLP against Maruti Enterprise was dismissed in Bhandari Scrap Traders, it declined, as a matter of judicial discipline, to read the provision down. It added, however, that the vice complained of does not inhere in the text of Section 16(2)(c); it arises when the provision is torn out of the statutory scheme and applied in a routine and mechanical manner. The provision must be applied in harmony with Section 41, Sections 73, 74, 75(12), 76 and 79, and Rules 36, 37A and 88C. Section 76, which makes a supplier pay over tax collected, cannot be rendered toothless, and before 26.12.2022 there was no mechanism to re-avail reversed credit.It laid down binding guidelines. Cancellation of the supplier’s registration, nil returns or alerts are only a starting point for inquiry. The officer must record satisfaction on the supplier’s particulars, the nature of the default and the recovery steps taken against the supplier, and establish a direct link with the purchaser. The show cause notice must disclose the material and supply the relied-upon documents. Where Section 74 is invoked, the notice itself must state the foundational facts, and the fraud of the selling dealer shall not be attributed to the purchasing dealer unless the notice discloses the facts connecting the purchasing dealer with such fraud. Other guidelines cover period-wise application of the law, no cancellation of the purchaser’s registration merely on this ground, hearing and cross-examination, and reasoned findings on each Section 16(2) condition. All matters were remitted for fresh adjudication, with eight weeks to reply, deposits to abide the result, and no coercive action in the meantime.

BACKGROUNDThe assessee filed a return of income for the assessment year 1968-69 but failed to pay self-assessment tax within the prescribed time under Section 140A(1) of the Income Tax Act. The Income Tax Officer imposed penalty under Section 140A(3) for non-payment of self-assessment tax. The Appellate Assistant Commissioner reduced the penalty on appeal. In second appeal, the Bombay Income Tax Tribunal took note of the Madras High Court decision in A.M. Sali Maricar which had struck down Section 140A(3) as unconstitutional being violative of Article 19(1)(f) of the Constitution, and cancelled the penalty order on that basis. The Revenue challenged this before the Bombay High Court by way of a reference question. CRUCIAL COURT OBSERVATIONS (Verbatim)"It is the settled position in law, in view of the decision of the Supreme Court in K.S. Venkataraman and Co. (P.) Ltd. v. State of Madras, that an authority created by a statute cannot question the vires of that statute or any of the provisions thereof whereunder it functions.""It should not be overlooked that the Income-tax Act is an All-India statute and if an Income-tax Tribunal in Madras, in view of the decision of the Madras High Court, has to proceed on the footing that section 140A(3) was non-existent, the order of penalty thereunder cannot be imposed by the authority under the Act. Until contrary decision is given by any other competent High Court, which is binding on a Tribunal in the State of Bombay, it has to proceed on the footing that the law declared by the High Court, though of another State, is the final law of the land.""What the Tribunal really did was that in view of the law pronounced by the Madras High Court it proceeded on the footing that section 140A(3) was non-existent and so the order of penalty passed thereunder cannot be sustained.""When the Tribunal set aside the order of penalty it did not go into the question of intra vires or ultra vires. It did not go into the question of constitutionality of section 140A(3). That section was already declared ultra vires by a competent High Court in the country and an authority like an Income-tax Tribunal acting anywhere in the country has to respect the law laid down by the High Court, though of a different State, so long as there is no contrary decision of any other High Court on that question." FINAL VERDICT The Bombay High Court answered the reference question in the negative and in favour of the assessee, holding that the Tribunal was correct in setting aside the penalty order and was not required to independently go into the constitutionality of Section 140A(3), since it was duty-bound to follow the Madras High Court's declaration that the section was non-existent, there being no contrary High Court decision at the relevant time. Costs awarded to the assessee. 👍

BackgroundBy order dated 08.07.2026 the Tribunal had admitted the assessee’s appeal holding that no further pre-deposit under Section 112(8)(b) was required, relying on Ashirwad Food Industries (Jharkhand HC). The Department filed an interlocutory application to recall/modify that finding, contending that it was passed without hearing it and that the words “in addition to the amount paid under sub-section (6) of section 107” mandate a separate 10% deposit; it relied on Abhijit Nayak (Orissa HC, order dated 27.11.2025) and CIT v. Calcutta Knitwears (strict construction of taxing statutes). Admittedly, the assessee had deposited Rs.1,13,448/- under Section 107(6) against disputed tax of Rs.11,34,474/-, which the Appellate Authority reduced to Rs.1,02,012/-.Final VerdictThe Tribunal distinguished both authorities cited by the Department on facts and observed that the pre-deposit is not payment towards any separate or independent liability but a specified portion of the disputed tax itself; once the Appellate Authority reduces the demand, the surviving demand becomes the “tax in dispute” before the Tribunal, and a literal reading (illustrated by an assessee who pays the entire demand under protest) would yield an anomalous and unworkable result. It held that the statutory requirement cannot be applied mechanically where the amount already deposited equals or exceeds the aggregate percentage of the tax remaining in dispute before the Tribunal. Finding the facts identical to Ashirwad Food Industries, whose ratio on the same central legislation carries persuasive value, the Tribunal found no ground to interfere with the order dated 08.07.2026 and disposed of the IA without costs.